Taxpayers with unpaid taxes traveling to the United States subject to delay at border

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Taxpayers with unpaid taxes traveling to the United States subject to delay at border

Date: 08/31/12

Topic: Taxation

U.S. and non-U.S. persons with unpaid federal tax liability traveling to the United States may find their name coming up in the Treasury Enforcement Communications System (TECS), a database maintained by the Department of Homeland Security. The TECS is a computer based information system designed to identify individuals and businesses suspected of involvement in violations of federal law. If a taxpayer has an unpaid tax liability and is subject to a resulting Notice of Federal Tax Lien, the IRS can submit information to TECS. Accordingly, the inbound taxpayer may be detained at the border, questioned, and flagged for follow-up enforcement.

Regardless of whether the taxpayer was aware of the unpaid taxes, Immigration and Customs Enforcement (ICE) Agents, at the border, can inquire into the nature of the taxpayer’s travel and what assets the taxpayer may hold in the United States or its territories as a way of discovering garnishment opportunities. The information then is transmitted to an IRS coordinator through a referral program that enables the IRS to follow up with the taxpayer. If the taxpayer has not satisfied the back taxes owed, the IRS can issue a federal tax lien on the taxpayer’s real or personal property. A properly filed federal tax lien publically alerts creditors that the IRS has a priority claim, but if the lien is filed in the wrong location, it will not have priority over a later purchaser, holder of a security, mechanics lien, or judgment lien creditor.

Only individuals that reside outside the U.S. and its commonwealths or territories will be entered into the TECS. Taxpayers placed on TECS are often not subject to ordinary administrative and judicial collection procedures because they reside outside the jurisdiction of the U.S. Courts. Information derived from placing a taxpayer on TECS can facilitate contact with these taxpayers or provide asset information that, in turn, may facilitate collection of their delinquent liabilities. Ordinarily a federal tax lien is filed in the office designated by the state any property is located. However, taxpayers residing outside the U.S. are deemed to reside in Washington, D.C., for lien-filing purposes. Consequently, the Notice of Federal Tax Lien must be filed in the Recorder of Deeds office for the District of Columbia. To be removed from TECS certain prerequisites must be met. Inter-agency coordination can slow this process so it is possible to be detained for a period after the IRS has withdrawn or released a lien.

To keep your travels on schedule it is important that the IRS know how to reach you, therefore you should make sure your address is up to date on all IRS filings. This will prevent default resulting in referral to the system and keep you on the move.